CHURN PREDICTION AND MANAGEMENT SYSTEM
A system and method for managing churn among the customers of a business is provided. The system and method provide for an analysis of the causes of customer churn and identifies customers who are most likely to churn in the future. Identifying likely churners allows appropriate steps to be taken to prevent customers who are likely to churn from actually churning. The system included a dedicated data mart, a population architecture, a data manipulation module, a data mining tool and an end user access module for accessing results and preparing preconfigured reports. The method includes adopting an appropriate definition of churn, analyzing historical customer to identify significant trends and variables, preparing data for data mining, training a prediction model, verifying the results, deploying the model, defining retention targets, and identifying the most responsive targets.
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This application is a divisional application of U.S. application Ser. No. 11/347,141, filed Feb. 3, 2006, which claims the benefit of EPO Application No. 05425946.0, filed Dec. 30, 2005, and Italian Application No. MI2005A002526, filed Dec. 30, 2005, each of which are incorporated herein by reference in their entirety.
BACKGROUNDConsumers typically purchase products or subscribe to services from businesses who they perceive to be offering the best products or services at the lowest price. And while consumers are often loyal to providers and brands they are familiar with, they will surely shift allegiance if they believe they can obtain better products or services or a better price somewhere else. Established ongoing relationships with existing customers can be a significant source of revenue for many businesses losing customers to competitors can significantly cut into a company's revenue. Managing this phenomenon, taking active steps to prevent customer “churn” is a high priority for many businesses.
In many cases it is less expensive for a business to retain existing customers than to acquire new ones. For this reason many companies will go to great lengths to maintain their existing customer base. In highly competitive industries it is common for companies to implement elaborate customer loyalty programs or aggressive customer retention programs to prevent or limit churn. Such programs may offer incentives to customers to entice them to continue buying the company's products or services or they may simply provide some personalized contact or message to existing customers to reinforce and strengthen the relationship.
Designing an efficient and effective customer retention program can be difficult, especially when confronted with a large diversified customer base. Companies may not know whether churning is a significant problem or not. And if it is, which customer groups are most likely affected. Furthermore, a company's tolerance threshold for churn may be very low. Customer churn may be considered a problem even though it may only affect a small percentage of the overall customer base. Contacting all customers during a customer retention program is too expensive and inefficient. However, contacting too few customers could result in a failure to contact many customers who are likely to churn and who are the appropriate targets of the customer retention program. Deciding who to contact, represents a significant obstacle to preparing an effective customer retention program.
Ideally a customer retention program will contact the maximum number of potential churners with the fewest total number of customer contacts. This point is illustrated in the graph 10 of
A second curve 1A represents the ideal situation in which the identity of all future churners is known. In this case only churners need be contacted. No contacts will be wasted on non-churners since churners comprise 5% of the total customer population, 100% of all churners can be contacted by contacting only 5% of the total customer population. Obviously, contacting only known churners is a far more efficient mechanism for reaching significant numbers of churners than by contacting customers at random. Unfortunately, the identity of customers who will churn are not known in advance, and it is not realistic to put together a customer retention target list that includes only the names of those customers who will assuredly churn in the near future.
A third curve 16 represents an attractive targeting profile for a customer retention program. While it is impossible to determine in advance which customer will churn, it is possible to determine with some degree of accuracy, which customers are more likely to churn than others. In this case, customers who are more likely to churn are targeted first. Predicting who will churn and who will not churn is not a precise science. Some customers may be contacted who have not churned and some customers who will end up churning may not be. Nonetheless, the overall affect is a significant improvement in the targeting efficiency over the randomly selected method 302. As can be seen, the shape of curve 306 approximates the shape of the ideal curve 304. Approximately 70% of all churners may be contacted by contacting only 10% of the total customer population (a significant improvement over the random contact method in which 70% of all customers would have to be contacted to reach 70% of churners). A good targeting profile will have a very steep initial rise, indicating that most of the customers initially contacted are in fact churners. The key to developing a good targeting profile is accurately predicting which customers are likely to churn and which will not. To make such predictions an intimate and detailed knowledge of the customer base is absolutely essential.
BRIEF SUMMARYThe present invention relates to a system and method for analyzing and predicting churn within a business's customer base so that steps may be taken to limit or otherwise manage churn. The system and method provide business intelligence to business users responsible for retaining customers. The business intelligence provided by the invention facilitates efforts to retain high profitability customers and prevent erosion of the customer base. The invention allows business intelligence consumers to analyze their customer base, identifying customer behavior patterns and tracking trends that impact customer churn. Such analysis can be beneficial in understanding the causes of churn and identifying early warning signs that may indicate when a customer is contemplating or has decided to drop a particular service plan. Knowing the causes of customer churn, a business may take steps to improve products and services to reduce churn in the future. Furthermore, identifying potential churners early allows a business to take proactive steps to retain customers who may otherwise be lost.
According to the invention historical data are analyzed in order to develop a strict definition of churn and to distinguish between active and churned customers. The characteristics of churners and non-churners are analyzed to identify the key characteristics of each and to identify the reasons why customers churn. Data mining processes identify clusters of customers based on a large number of variables that define various customer attributes. The clustering function allows business intelligence consumers to see patterns and associations between customers and customer groups that would otherwise remain hidden in the vast amounts of data the present invention considers. Statistical models are created to score customers based on their propensity to churn. Customers having a high propensity to churn may be contacted as part of a customer retention or churn management program and offered incentives not to drop a particular service or service plan. For example, potential churners may be offered special pricing terms, extra services, or other incentives to dissuade them from dropping a service.
The present invention analyzes the characteristics and behavior patterns of past churners and non-churners alike. The invention identifies the factors and behavior and usage patterns that often precede either a customer's decision to churn or the actual event itself after the decision has been taken. The information gleaned from past customer behavior is applied to current customer data in order to predict which present customers are likely to churn in the future. Customers with the highest propensity to churn may be selected as targets for a customer retention program. By targeting only customers having a high propensity to churn, the present invention provides optimized customer lists designed to include a much higher percentage of potential churners out of a limited portion of the overall customer base. The present invention provides the processes and tools for designing and implementing effective customer retention programs.
According to an embodiment of the invention a system for managing churn among the customers of a business having a statistically large customer base is provided. The heart of the system is an optimized data mart configured to receive and store vast amounts of customer data. A population architecture is provided to receive customer data from one or more external and load the data into the data mart. The customer data stored in the data mart define a plurality of customer attributes for the customers in the customer base. A data manipulation module is provided for preparing one or more analytical records from data stored in the data mart. The data are prepared for data mining. A data mining tool is provided for analyzing the one or more analytical records prepared by the data manipulation module. The data mining tool is adapted to return results identifying clusters of customers sharing common customer attributes and calculating individual customers' propensities to churn during a predefined period in the future. The data manipulation module returns the results and stores them in the data mart. An end user access module is provided for accessing the results returned from the data mining tool and presenting the results to a user.
Another embodiment provides a method of designing an efficient customer retention program for managing customer churn among the customers of a business having a statistically large customer base. The customer retention program includes an analysis of the causes of customer churn and identifies customers who are most likely to churn in the future. Identifying likely churners allows appropriate steps to be taken to prevent customers who are likely to churn from actually churning. The method includes adopting a set of definitions of churn sufficient to encompass all customers in the customer base and which relies on objective factors to determine whether individual customers have churned or remain active. Historical customer data are analyzed to identify significant trends and variables that provide insight into causes of churn and to identify classes of customers who are more likely to churn than others. Customer data, including data corresponding to the identified trends and variables, are prepared for data mining and predictive modeling. A Predictive model is trained on historical customer data, and the accuracy of the predictive model is verified based on historical data. Once the model is trained and its accuracy verified, the model is deployed on current customer data to generate a propensity to churn score for individual customers. The propensity to churn score indicates the relative likelihood that the individual customer will churn within a specified time period in the future. Once the customers are scored, the characteristics of target customers who are to be contacted during the course of the customer retention program are defined and a list of targeted customers having the defined characteristics is compiled.
In another embodiment a method of identifying targets for a customer retention program is provided. The method of this embodiment includes identifying a set of customer data variables from which a customer's propensity to churn during a future period may be estimated based on values of the identified customer data variables associated with the customer. The method further calls for providing a data mining tool with predictive modeling capabilities. The data mining tool supports at least one predictive model for estimating the propensity of individual customers to churn during the future period. The predictive model is then trained on historical customer data for which churn results are known. The at least one predictive model is then refined based on a comparison of the estimated churn propensities of individual customers against actual churn results. Once trained the predictive model is deployed on current data to estimate churn propensities of individual customers for the future period. Targets for the customer retention program are then selected based on customer churn propensities.
Other systems, methods, features and advantages of the invention will be, or will become, apparent to one with skill in the art upon examination of the following figures and detailed description. It is intended that all such additional systems, methods, features and advantages be included within this description, be within the scope of the invention, and be protected by the following claims.
In order to support the churn analysis and predictive methods of the present invention, the data mart 110 must be populated with a substantial amount of customer data for each customer in the customer base. Revenue data may be provided by the enterprise billing system. Customer demographics, geographic data, and other data may be provided from a customer relationship management system (CRM). If the enterprise is a telecommunications services provider, usage patterns, traffic and interconnection data may be provided directly from network control systems. Other data sources may provide other types of customer data for enterprises engaged in other industries. Alternatively, all or some of the data necessary to populate the data mart 110 may be provided by a data warehouse system or other mass storage system.
According to an embodiment, the data requirements of the system 100 are pre-configured and organized into logical flows, so that the data source systems 102, 104, 106, etc., supply the necessary data at the proper times to the proper location. Typically this involves writing a large text file (formatted as necessary) containing all of the requisite data to a designated directory. Because most enterprises operate on a monthly billing cycle the data typically will be extracted on a monthly basis to update the data mart 110.
The population architecture 108 is an application program associated with the data mart 110. The population architecture is responsible for reading the text files deposited in the designated directories by the various data sources at the appropriate times. The population architecture may perform quality checks on the data to ensure that the necessary data are present and in the proper format. The population architecture 108 includes data loading scripts that transform the data and load the data into the appropriate tables of the data mart 110 data model.
The data mart 110 is a traditional relational database and may be based on, for example, Oracle or Microsoft SQL Server platforms. The data mart 110 is the core of the system architecture 100. The customer and revenue data are optimized for fast access and analytic reporting according to a customized data model. Star schemas allow an efficient analysis of key performance indicators by various dimensions. Flat tables containing de-normalized data are created for feeding the predictive modeling systems.
As will be described in more detail below, the data mining module 116 performs clustering functions to identify significant groupings of customers based on common characteristics or attributes. Such clusters are discovered across a large number of customer variables with no pre-conceived target variables or predefined groupings. The data mining module 116 further creates predictive models for calculating each customer's propensity to churn. The data mining module 116 may be a commercially available data mining tool such as the SAS data miner or the KXEN data mining tool. In order to maximize the discovery power of the data mining tool, variables known to be significant to identifying and predicting churn are provided to the data mining module 116. The data manipulation module 114 pulls the necessary data from the data mart 110, calculates derived variables and formats others to create data files for feeding data into the data mining module 116. The effectiveness of the data mining operation is highly dependent on the quality of the data provided to the data mining tool. Accordingly, as will be described in more detail below, great care must be taken in the selection of the variables supplied to the data mining tool. The data manipulation module 114 is also responsible for receiving the output from the data mining module and loading the results back into the data mart 110.
The end-user access module 118 pulls data from the data mart 110 to be displayed in the various pre-configured reports 120. The end user access module 118 includes online analytical processing capabilities based on market standard reporting software. Because all of the data stored in the data mart 110 are accumulated and stored on a customer by customer basis, the online analytical processing capabilities of the end user access module 118 allow the end user to alter display criteria and filter customers by various customer attributes such as relevant clusters, churn propensity, and the like, to significantly expand the business intelligence insights that may be gleaned from the churn analysis and predictive modeling system.
Once churn has been adequately defined, historical customer data can be analyzed to gain insights into the factors and circumstances that lead to instances of churn. For example, once churn has been defined it is a fairly straightforward process to classify current and past customers as either active or churned. Analysis of these two groups, their usage patterns, profitability, the average tenure of customers within each group, and many other trends and variables can provide significant insights into the causes of churn and clues to identifying the customers likely to churn in the future. For example,
Another preliminary task in the churn prediction and management process involves identifying significant trends and variables that impact churn 132. The purpose of identifying trends and variables at 132 is to identify the most significant customer variables which when aggregated, averaged, compared or otherwise dissected, manipulated, and evaluated may provide insights into customer churn and the individual decisions made by customers that lead to churn. The trends and variables identified at this stage will be highly dependent on the specific products and services a company or service provider provides. For example, according to an embodiment of the invention, approximately 200 variables and trends have been identified for analyzing historical data for predicting and managing churn among the customers of a telecommunications service provider. A complete list of these variables and a brief description of each is shown in Table 1. Some of the variables may be obtained directly from the data provided by the operational data sources, 102, 104, 106 (
In many cases the raw historical data must be aggregated in some manner in order to present the data in a coherent meaningful way. A particularly useful way of aggregating the customer data is to calculate customer distributions relative to different variables and to classify customers according to where they fall within the distribution. Here an example is instructive. Most businesses would likely be interested in understanding the relationship between churn and the average monthly revenue generated by individual customers. What is the churn rate for low revenue customers compared to high revenue customers? Is there a revenue class that has a higher churn rate than other revenue classes? These questions and questions like them may be answered by calculating the average monthly revenue for each customer in the customer base, calculating the distribution of customers based on their average revenue, and classifying customers based on their position within the overall distribution. Thresholds may be established, and customers may be classified according to their positions within the customer distribution relative to the thresholds. For example customers may be classified as having very low average monthly revenue, low, medium, high, very high and highest average monthly revenue. Of course, different classifications appropriate to other variables may be devised as well. Finally, the churn rate, or some other performance measure may be calculated for each class as a whole and the results plotted in graphical form. Other methods of aggregating, manipulating and displaying significant trends and variable data may also be adopted.
Next,
As these examples make clear, analyzing historical data according to the significant trends and variables identified in task 132 can provide significant insights into customer behavior and the causes of churn. It can also help identify the characteristics of customers who have churned in the past, characteristics which may help identify customers who may churn in the future. The analysis described above is but a small sampling of the types of analysis that are possible using the present invention. Preconfigured reports 120 may be derived containing substantially any of the variables identified at 132. For an embodiment relating to predicting and managing churn within a telecommunications service provider's customer base, reports may be created to compare and contrast the churn rate and/or any of the approximately 200 significant variables that have been identified. The ready access to such reports creates an unparalleled opportunity to delve into the nature and causes of churn.
Moving beyond the historical analysis of past churn events, the present invention further provides data mining and statistical modeling functions for identifying additional characteristics of churners and common patterns that lead to churn. The two main data mining functions are a clustering analysis function and predictive modeling. The clustering function analyzes large numbers of customer attributes and identifies significant customer groupings based on shared attributes. The cluster analysis function is somewhat analogous to the historical data analysis described above, however, whereas the historical analysis described above is limited to two dimensions, e.g. churn rate v. average monthly revenue class, the cluster analysis examines data and identifies clusters across substantially unlimited dimensions. Because the data mining module is capable of considering, comparing, and cross referencing a vast number of different customer attributes and variables, the data mining module is able to identify significant groups of customers whose similarities may have otherwise remained submerged in a sea of seemingly unrelated data points amassed in the data mart 110. The data mining tool is also provided to generate predictive models for determining which customers are likely to churn in the future. The predictive models are provided to score individual customers based on their propensity to churn in the future.
An important factor in successful data mining is the quality of the data supplied to the data mining tool. By adroit selection and manipulation of the raw customer data received from external operating systems 102, 104, 106 the system and method of the present invention can leverage knowledge and experience of the business and industry in which churn is to be predicted and managed. Accordingly, the process for predicting and managing churn shown in
In addition to raw customer data received from external systems, variables derived from the raw data can provide significant insights into the causes of churn and the characteristics of customers likely to churn. As with the analysis on historical data, derived variables can play a substantial role in identifying clusters of customers based on similar attributes and evaluating the churn rate for such clusters to determine whether the characteristics that define the clusters are relevant predictors of churn.
The derived variables for feeding the clustering function of the data mining tool may be calculated in much the same way as the derived variables for the analysis on historical data. In fact many of the derived variables from the analysis on historical data may be applied to current data and provided to the clustering function. The derived variables may be based on any variables that have a continuous smooth domain. In other words, variables that can take on only a small number of discrete values such as male/female, student/adult/senior, and the like, are not appropriate for input to the clustering function. Acceptable variables may include averages, such as average customer revenue over a predefined time period, the slope of customers' profitability trend lines, average traffic patterns, usage trends, and the like. The customer distribution is then calculated based on the value of the selected variable for each individual customer. Customers may then be classified according to their position in the distribution and their classification stored as a derived variable.
In the context of the system 100 shown in
Another preliminary task that must be performed before the data mining tool can be applied to current data to predict churn in the future is to train the models 136. The predictive models are trained on historical data sets for which the results (i.e. whether individual customers churned or did not churn during a specified prediction window) are already known.
The data set 200 corresponds to an embodiment of the invention in which churn has been defined as two consecutive months of customer inactivity. According to this definition, the determination that a customer has churned cannot be made until two months after the customer's last recorded activity.
In the embodiment shown in
When operating on “live” data, the data for the month M in which the data set is collected are not available because the full month's worth of data would not be complete until the end of the month. Therefore, in the historical data set 200, the data for the month M, though technically available since it was accumulated sometime in the past, is withheld from the training set in order to be consistent with the conditions under which the model will actually be deployed.
Because of the definition of churn it will take two months to detect a churn event after a customer's last recorded activity. Since data from month M is excluded, churn events cannot be detected prior to the start of month M+2. Thus, a gap period 206 extends from M through M+1. Since the prediction model is being trained to predict churn in the months following M based on data accumulated in the months preceding M, the data set 200 includes customer data from each of the six months M−1 through M−6 preceding M. The last aggregated data before the analysis period M may be excluded to in order to avoid processing data that is too highly correlated with the target variable. Thus, the excluded window 204 is shown in month M−1. Finally, the model is to have a three month prediction window. Because of the gap period 206, the prediction horizon cannot begin before M+2 and extends through the end of M+4.
In order to ensure as many observations of the churn phenomenon as possible, and to ensure that a full complement of historical data are available to analyze each churn event, the data set is limited to customer data from only those customers who activated their service before the start of the analysis window, i.e. before M−6, and customers who placed at least one call during the prediction window.
The upper portion of
According to an embodiment of the invention, the models are trained using multiple overlapping data sets as shown in
Returning to
To ensure the independence of the validation step, the data set applied to validate the model must not be among the data sets used to train the model. If the results are satisfactory, the model may be deployed on live data. If not the model may be scrapped.
Once the models have been trained at 136 and the results verified at 138, the models are deployed at 140. Deploying the models 140 involves applying current data to the models and performing the clustering and churn propensity scoring on the current data. According to the embodiment shown in
The clustering function identifies significant groupings of customers based on common attributes. As mentioned above, different types of customer characteristics may be investigated by feeding different types of customer data to the data mining tool. For example, the data manipulation module 114 shown in
In conjunction with the reporting capabilities of the end user access module 118, the clustering function can provide powerful visual aids to understanding the forces that drive customer behavior and value. For example,
Whereas the clustering function is geared toward learning more about the churn phenomenon and understanding the characteristics of customers within the customer population, the predictive modeling is geared toward identifying the customers who are most likely to churn in the future. To that end, each customer is scored according to his or her individual propensity to churn. Customer retention programs may be directed toward customers having the highest propensities to churn. The churn propensity scores may be further filtered by other parameters so that highly targeted campaigns may be enacted. By concentrating efforts on the customers must likely to churn, many more likely churners may be contacted in the course of contacting fewer customers.
Based on the clustering and scoring, the targets for a customer retention program are defined at 142. In general, the defined targets will be the customers having characteristics indicating a high propensity to churn (i.e. belonging to clusters known to have had a high churn rate in the past) and customer having the highest propensity to churn scores. Optionally, the retention target list may be refined using criteria other than churn propensity. For example, the process shown in
Finally, once all of the criteria have been established for defining the customers to be targeted, the final task 144 is to specifically identify the customers who meet the criteria and compile a customer retention target list. The customers identified in the retention target list may be provided to an automated system for implementing a customer retention program, or provided to personnel responsible for implementing such a program.
The end result of implementing a churn prediction and management program as outlined in the flow chart of
While various embodiments of the invention have been described, it will be apparent to those of ordinary skill in the art that many more embodiments and implementations are possible within the scope of the invention. Accordingly, the invention is not to be restricted except in light of the attached claims and their equivalents.
Claims
1. A method of designing an efficient customer retention program for managing customer churn among customers of a business having a statistically large customer base, the customer retention program including an analysis of the causes of customer churn and identifying customers who are most likely to churn in the future, so that appropriate steps may be taken to prevent customers who are likely to churn in the future from churning, the method comprising:
- adopting a definition of churn sufficient to encompass all customers in the customer base and which relies on objective factors to determine whether individual customers have churned or remain active;
- analyzing historical customer data to identify significant trends and variables that provide insight into causes of churn and to identify classes of customers who are more likely to churn than others;
- preparing customer data, including data corresponding to the identified trends and variables, for data mining and predictive modeling;
- training at least one predictive model on historical customer data;
- verifying the accuracy of the at least one predictive model based on historical data;
- deploying the at least one trained model on current customer data to generate a propensity to churn score for individual customers indicating the relative likelihood that the individual customer will churn within a specified time period in the future;
- defining characteristics of the target customers to be contacted during the course of the customer retention program; and
- compiling a list of targeted customers having the defined characteristics.
2. The method of designing an efficient customer retention program of claim 1 wherein training the predictive model comprises:
- assembling a first historical data set that includes prepared customer data from a training period in the past for which churn results are already known, applying the first historical data set to the predictive model to obtain a first set of training results; comparing the first set of training results to the known churn results for the training period; and
- adjusting the model to compensate for discrepancies between the training results and the known churn results.
3. The method of designing an efficient customer retention program of claim 2 wherein training the predictive model further comprises:
- assembling a plurality of historical data sets from a plurality of training periods in the past for which the churn results are already known;
- applying the historical data sets to the predictive model in an iterative process, and;
- comparing the training results to the known churn results for each iteration, and adjusting the model accordingly.
4. The method of designing as efficient customer retention program of claim 3 wherein the plurality of historical data sets are taken from different but overlapping training periods.
5. The method of designing an efficient customer retention program of claim 1 wherein verifying the accuracy of at least one predictive model comprises:
- assembling model verification data set that includes prepared customer data from a verification period in the past for which churn results are already known;
- applying the verification data set to the predictive model to obtain a set of verification test results;
- comparing the verification test results to the known churn results for the verification period, and
- determining whether the verification results are satisfactory.
6. The method of designing an efficient customer retention program of claim 1 wherein preparing customer data for data mining and predictive modeling comprises calculating derived variables from customer data, the derived variables being applied to data mining and predictive modeling.
7. The method of designing an efficient customer retention program of claim 6 wherein calculating a derived variable comprises calculating an average value from a plurality of data values based on multiple observations of a single data variable.
8. The method of designing an efficient customer retention program of claim 6 wherein calculating a derived variable comprises calculating a trend line that represents a best fit among a plurality of data points based on multiple observations of single variable, and calculating a slope of the trend line.
9. The method of designing an efficient customer retention program of claim 6 wherein calculating a derived variable comprises calculating a distribution of customers based on a value of a data variable associated with individual customers, and classifying customers based on where they fall within the distribution according to the values of the data variable associated with each individual customer.
10. The method of designing an efficient customer retention program on claim 1 wherein preparing customer data for data mining and predictive modeling comprises assembling and analytical record including data from a plurality of customers, the data including variable values associated with individual customers for the variables that have been identified as being significant for analyzing and predicting churn.
11. The method of designing an efficient customer retention program of claim 10 wherein preparing customer data for data mining and predictive modeling comprises assembling a first analytical record for input to a clustering data mining operation to in which significant groups of customers are identified based on common behavior characteristics, and assembling a second analytical record for input to the clustering data mining operation to identify significant groups of customers based on common value characteristics.
12. The method of designing an efficient customer retention program of claim 1 wherein defining characteristics of target customers to be contacted during the course of the customer retention program comprises establishing a threshold churn propensity score, and targeting customers having a churn propensity score greater than the established threshold.
13. The method of designing an efficient customer retention program of claim 12 further comprising identifying a customer characteristic other than a customer's churn propensity score, and further filtering targeted customers based on the other characteristic.
14. The method of designing an efficient customer retention program of claim 13 wherein the other customer characteristic is customer value.
15. A method of identifying targets for a customer retention program, the method comprising:
- identifying a set of customer data variables from which a customer's propensity to churn during a future period may be estimated based on values of the identified customer data variables associated with the customer;
- providing a data mining tool with predictive modeling capabilities, the tool supporting at least one predictive model for estimating the propensity of individual customers to churn during the future period;
- training the at least one predictive model on historical customer data for which churn results are known such that the at least one predictive model may be refined based on a comparison of the estimated churn propensities of individual customers against actual churn results;
- deploying the trained model on current data to estimate churn propensities of individual customers for the period;
- selecting targets for the customer retention program based on said churn propensities.
16. The method of identifying targets of a customer retention program of claim 15 further comprising:
- receiving customer data in monthly installments; and
- defining a prediction horizon such that the predictive model calculates customer propensities to churn during the prediction horizon based on customer data installments received in previous months.
17. The method of identifying targets of a customer retention program of claim 16 further comprising compiling a first historical data training set including a plurality of historical customer data installments, an historical data analysis month, and an historical prediction horizon, all corresponding to a period of time in the past, the first historical data set including actual churn results accumulated during the historical prediction horizon.
18. The method of identifying targets for a customer retention program of claim 17 wherein training the at least one predictive model on historical customer data comprises applying the first historical data training set to the predictive model to predict churn events expected to have occurred in the historical prediction horizon and comparing the predicted churn events with the actual churn results accumulated during the historical prediction horizon, and refining the predictive model based on any discrepancies.
19. The method of identifying targets for a customer retention program of claim 18 further comprising compiling a second historical data training set substantially similar to the first historical data training set but wherein the historical customer data installments, the historical data analysis month, and the historical prediction horizon of the second historical data training set are offset in time from the historical customer data installments, the historical data analysis month, and the historical prediction horizon of the first historical data training set.
20. The method of identifying targets for a customer retention program of claim 18 further comprising compiling a model verification data set substantially similar to the first historical data training set but wherein the historical customer data installments, the historical data analysis month, and the historical prediction horizon of the model verification data set do not correspond in time with the historical customer data installments, the historical data analysis month, and the historical prediction horizon of the first historical data training set.
21. The method of identifying targets for a customer retention program of claim 20 further comprising applying the model verification data set to the predictive model to predict churn events expected to occur in the historical prediction horizon of the verification data set, and comparing the results predicted by the predictive model with the actual churn results accumulated during the verification data set prediction horizon.
22. The method of identifying targets for a customer retention program according to claim 15 wherein the data mining tool comprises an SAS Data Miner.
23. The method of identifying targets for a customer retention program according to claim 15 wherein the data mining tool comprises a KXEN data mining tool.
24. The method of identifying targets for a customer retention program according to claim 15 further comprising defining at least one derived variable and calculating a derived variable value for individual customers.
25. The method of identifying targets for a customer retention program according to claim 24 wherein calculating a value for the derived variable comprises:
- selecting a base variable for which individual customers have a corresponding value each month;
- calculating a base variable average value for individual customers based on individual customers' base variable monthly values over a number of months;
- calculating a customer distribution based on individual customers' base variable average values;
- classifying customers based on their position within the distribution; and
- storing individual customers' classifications as the customers' derived variable values.
Type: Application
Filed: Apr 2, 2014
Publication Date: Sep 18, 2014
Applicant: Accenture Global Services Limited (Dublin)
Inventors: Matteo Maga (Milan), Paolo Canale (Rome), Astrid Bohe (Kronberg)
Application Number: 14/243,655
International Classification: G06Q 10/06 (20060101); G06Q 30/02 (20060101);